Surprise move as cigarette tax goes down in Turkey

The governing party in Turkey has decided to cancel the cigarette tax by 5.6 Lira ($1.06) after the increase was implemented to discourage citizens to stop using tobacco.

The decision by the Justice and Development Party (AKP) will now allow companies selling cigarettes to sell the drug under 3 Turkish Lira ($ 0.55).

The changing of the Special Consumption Tax (SCT) on cigarettes was signed by Turkish President Recep Tayyip Erdogan.  The new law was published in the official gazette and will immediately be implemented.

According to the new law, the government previously increased SCT on cigarette from 63 percent to 67 percent, although the 5.6 Lira minimum lump-sum tax has been decreased, the “42 penny lump-sum tax” remains the same.

Erdogan Suzer, who is with the Turkish daily Sozcu, the new tax arrangement will lead to big discounts on cigarette but not increase as Turkey removed the minimum lamp-tax.

Turkey used to charge 3 different Special Consumption Tax as proportional tax, minimum lump-sum tax, and lump-sum tax.

The Turkish Finance Ministry introduced high minimum lump-sum tax after a tussle between the ministry and cigarette firms over price increases.

When the Finance Ministry increased the proportional tax, some companies reduced the cigarette prices.

As a result, the Finance Ministry lost hugely on tax revenue and to recover the revenue lost, the government introduced the minimum-lamp-sum tax as a result.

Despite this recent move, experts are of the view the Turkish government will introduce minimum lump-sum tax just after the upcoming election on 31 March.

Less pricey cigarettes, but more deaths

Cigarette companies will pay sixty-seven percent Special Consumer Tax instead of 5.6 Lira ($1.06) minimum lump-sum tax.

It was previously not possible for a company to sell a packet of cigarettes under the 7 Lira, but now if the firm sells a cigarette at the price of 3 Lira, the tax will be 2 Lira and 89 penny. The amount of tax reduced from 7 Lira to 4 Lira 53 penny if the company sell a pack of cigarette at the price of 5 Lira.

As the proportional tax increased from 63 percent to 67 percent, the tax burden will be 9 cents more in the 8.5 lira cigarette, 36 cents in the 9 lira cigarette, 40 cents in the 10 Lira cigarette, and 52 cents in the 13 Lira cigarette.

In Turkey, eighty-three thousand and a hundred people die every year from smoking-induced causes. Two hundred and fifty-two thousand children and 14.5 million adults use tobacco products. According to the World Health Organisation, Turkey comes second in the world when it comes to tobacco-related deaths among men.

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